FTC to Serve Google With Subpoenas in Broad Antitrust Probe

WSJ is reporting the that FTC is to Serve Google With Subpoenas over the next few days in a Broad Antitrust Probe:

WASHINGTON?The Federal Trade Commission is poised to serve Google Inc. with civil subpoenas, according to people familiar with the matter, signaling the start of a wide-ranging, formal investigation into whether the Internet-search giant has abused its dominance on the Web.

The agency’s five-member panel of commissioners is preparing to send its formal demands for information to Google within days, these people said. They said other companies are likely to receive official requests for information about their dealings with Google at a later stage.

Representatives for Google and the FTC declined to comment.

From Google’s perspective, the FTC’s unfolding antitrust probe is the most serious to date in the U.S., though it won’t necessarily lead to any federal allegations of wrongdoing against the company.

Although Google has faced several antitrust probes in recent years, the inquiries, at least in the U.S., have largely been limited to reviews of the company’s mergers and acquisitions. The U.S. Justice Department currently is conducting an antitrust review of Google’s recent purchase of Internet-advertising company Admeld Inc. for around $400 million, said people familiar with the probe.

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New York (CNN)—Internet search giant Google is bracing for a fine that could top $500 million, after a federal probe of illegal online pharmacy ads placed on the website over the past three years, CNN has confirmed.

Law enforcement sources tell CNN that federal prosecutors in Rhode Island, along with undercover agents from the Food and Drug Administration, are heading up a massive investigation aimed at showing Google knowingly took advertising money from websites selling highly addictive drugs without a legitimate prescription.

Six weeks after serving Google with broad subpoenas, Federal Trade Commission lawyers, in conjunction with several state attorneys general, have been asking whether Google prevents smartphone manufacturers that use its Android operating system from using competitors’ services, these people said.

And they’re looking into allegations that Google unfairly takes information collected by rivals, such as reviews of local businesses, to use on its own specialized site and then demotes the rivals’ services in its search results, the people said.

...the existence of the probe already appears to be affecting the Web giant’s behavior. The company has made tweaks to its search engine to mollify rivals and head off a possible legal clash with antitrust authorities.

Y’know, I always thought Google and patents were the bigger problem. The FTC, like the SEC, doesn’t always go after the right things no matter who’s in power, so I’ll remain skeptical on this particular deal until I get more info.

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Thanks, Steve.

I agree this is minor compared to the patent issues. It’s just another thorn to make Google wonder what if Android is worth all this grief. It also strips away their carefully cultivated persona of “open” and “don’t be evil”. What a crock!

I agree this is minor compared to the patent issues. It’s just another thorn to make Google wonder what if Android is worth all this grief. It also strips away their carefully cultivated persona of “open” and “don’t be evil”. What a crock!

I don’t know if this is all that minor. I’m not familiar with the specifics, so I’m also not saying it WILL become a big deal. But the reason I don’t think this is a minor issue is because this investigation is attacking Google’s core business.

Google could lose all of Android tomorrow and never even blink. But if an investigation hobbled or handcuffed Google’s core search functions, then we’re talking permanent damage similar to what happened to Microsoft following its anti-trust settlement.

I agree this is minor compared to the patent issues. It’s just another thorn to make Google wonder what if Android is worth all this grief. It also strips away their carefully cultivated persona of “open” and “don’t be evil”. What a crock!

I don’t know if this is all that minor. I’m not familiar with the specifics, so I’m also not saying it WILL become a big deal. But the reason I don’t think this is a minor issue is because this investigation is attacking Google’s core business.

Google could lose all of Android tomorrow and never even blink. But if an investigation hobbled or handcuffed Google’s core search functions, then we’re talking permanent damage similar to what happened to Microsoft following its anti-trust settlement.

Google is already changing their behavior. Whatever happens with the FTC will not affect their dominance in search advertising. They won that market fair and square. It’s just they were trying to obliterate what little competition they had by cheating. It was a stupid move.

I agree Android/AdMob provides little profit to Google. Take AdMob out of the equation and Android is a money pit almost as deep as Microsoft’s Bing. (maybe not that deep) But Android is what has buoyed GOOG’s stock price and once that bubble is popped…

So the FTC probes affect Google’s core business, but does not threaten their profits. The Android lawsuits don’t affect the core, but do threaten GOOG’s market cap. That’s why I think the former is relatively “minor” compared to the latter.

Google is already changing their behavior. Whatever happens with the FTC will not affect their dominance in search advertising. They won that market fair and square. It’s just they were trying to obliterate what little competition they had by cheating. It was a stupid move.

I agree Android/AdMob provides little profit to Google. Take AdMob out of the equation and Android is a money pit almost as deep as Microsoft’s Bing. (maybe not that deep) But Android is what has buoyed GOOG’s stock price and once that bubble is popped…

So the FTC probes affect Google’s core business, but does not threaten their profits. The Android lawsuits don’t affect the core, but do threaten GOOG’s market cap. That’s why I think the former is relatively “minor” compared to the latter.

What it may do is:
1) Make Google a little bit more cautious and less aggressive in pushing the envelope going forward.
2) Create distraction for executive management
3) bad PR. this is limited to tech bloggers and small population only but adds to the risk a wall st analyst must consider. Any public development on this may result in short term stock price swing.

I was trying to think of how to express my thoughts on this and a super nerdy analogy just jumped into my head.

This is like when Luke Skywalker (I told you it was super nerdy) was firing his torpedoes at the death star. The chances of a hit were minuscule but if he DID hit, his torpedo would go to the core of the death star and blow it up.

I think there is very little chance that this investigation will do Google any real damage. However, if it DOES, then it is attacking the core of Google’s business and implications of a finding of serious wrong doing would be enormous.

But was there permanent damage to Microsoft’s core business? They didn’t lose their dominance in OS market share.

I don’t know about that, Drew Bear. Yes there are many other factors involved, but Microsoft’s market valuation has gone nowhere but down since the anti-trust decree was agreed upon.

And if you read the Microsoft blog sites, they blame the anti-trust scrutiny for inducing a certain cautiousness in Microsoft - an unwillingness to attack certain markets for fear of triggering sanctions from the Justice department.

In the tech world, an inability to remain aggressive is as deadly as keeping a shark from swimming forward. We often blame Ballmer for Microsoft’s lack of vision. But perhaps some of the blame for Microsoft’s unwillingness to make bold bets in the past ten years can be laid at the Justice Department’s door.